On July 2, 2013, the Rhode Island Supreme Court handed down a decision addressing the issue of uninsured and underinsured coverage (UM/UIM). Rhode Island, like many states, has a UM/UIM statute which “requires insurance carriers to provide protection for those claimants who voluntarily contract with licensed carriers for liability coverage as against uninsured operators.” Basically, the law allows an injured party to recover more money from their own insurance provider when the other party does not have any liability insurance or enough liability insurance to cover the costs of the injured party’s losses (i).
In American States Insurance Company (ASIC) v. LaFlam, the Court found that two provisions of the company’s insurance agreement were against public policy. According to the Court’s opinion written by Justice Goldberg, Joann LaFlam was involved in an automobile accident on April 25, 2007. At the time of the car accident the vehicle was covered by a policy issued by ASIC. On May 19, 2010, she sent ASIC a demand for $1 million, which was the limit of her UM/UIM insurance policy. ASIC refused this demand because it claimed that her UM/UIM claim was time-barred by two provisions of its insurance contract. According to the opinion, the two provisions required LaFlam to make a demand for uninsured coverage within three years of the accident but her demand was sent just after the three year period elapsed. The Court declared these provisions void joining the “overwhelming majority of jurisdictions that have considered this issue” (ii).
The Court stated that the purpose of Rhode Island’s underinsured coverage law “remains indemnification for an insured’s loss rather than defeat of his or her claim.” The two issues in this case were one of first impression. The first issue addressed when a UM/UIM claim accrues and the second issue addressed whether an insurance agreement can shorten the length that a cause of action must be filed. In LaFlam’s case, the Court held that an uninsured claim accrues when the insurance policy is breached and not when the motor vehicle accident occurs, as ASIC argued. The Court reasoned that having the underinsured claim accrue on the date of the car crash “may have the unique effect… of barring recovery before the insured knows or has reason to know that she has a UM/UIM claim against her insurer.” This reasoning acknowledges that reality that legal proceedings following an auto accident can take years, which in turn prevents the injured party from knowing whether his or her injuries will be completely covered by the other party’s insurance policy. The Court declined to address the second issue, whether an insurance contract can shorten the length that a lawsuit must be filed, leaving this possibility open in future insurance contracts (ii).
Attorney Paul d’Oliveira stated, “The Court’s decision is a huge victory for Rhode Island citizens. This case is just another example of insurance companies trying to increase their bottom line at the expense of policyholders. Our law firm has run into this problem many times. Fortunately, our lawyers have experience with the insurance industry and we have helped our clients get the insurance money they deserve.” d’Oliveira & Associates has been practicing personal injury and Social Security Disability law for over 24 years.
The auto accident lawyers at the law firm have successfully handled numerous auto accident lawsuits and have helped their clients receive the uninsured and underinsured coverage they were legally entitled to. To contact the firm call 1-800-922-6878.
- (i) RI General Laws, Title 27, Chapter 7, Section 2.1.
- (ii) American States Insurance Company v. LaFlam, R.I. Supreme Court.